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1. Dr Kripa Shanker IIT Kanpur 1
Supply Chain
Management
Kripa Shanker
Industrial and Management Engineering Department
Indian Institute of Technology Kanpur

2. Dr Kripa Shanker IIT Kanpur 2
SUPPLY CHAIN MANAGEMENT
Introduction
Although companies have always acknowledged the
importance of the relationships that existed between
themselves and their customers and suppliers, it has only been
recently that creating and nurturing channel alliances has been
recognized as a critical source of strategic advantage.
Once a backwater of business management, creating chains of customers
and suppliers has arisen as perhaps today’s most important competitive
strategy.
Since around 1990, companies across a wide variety of
industries have become increasingly interested in exploring
the opportunities for competitive advantage that can be gained
by leveraging the core competence and innovative capabilities
to be found among network of business partners.

3. Dr Kripa Shanker IIT Kanpur 3
? What has caused this awareness of the inter-
connectiveness of enterprises ?
? What does the supply chain management (SCM) mean
and how is it to be implemented?
? What impact will the increasing dependence on
channel partnerships have on the fabric of today’s
business environment?
? What are the possible opportunities as well as the
liabilities of channel alliances?
? Are the benefits of channel partnerships focused
primarily on operations issues, or do they hold out the
opportunity for realization of fresh sources of market-
winning product and service value?
SUPPLY CHAIN MANAGEMENT
Introduction

4. Dr Kripa Shanker IIT Kanpur 4
Reason 1 :
Response to several critical business requirements
THEN (over the past decade)
o Application of computerized information system
o Utilization of management techniques such as
Just-In-Time (JIT), Total Quality Management (TQM),
Business Process Reengineering (BPR), etc
o Implementation of employee empowerment and cross
functional management philosophies
have activated highly agile, lean product design and
manufacturing functions capable of superlative
quality and service
Emergence of SCM

5. Dr Kripa Shanker IIT Kanpur 5
NOW
Sustaining the collective momentum of these
management paradigms has required companies to
turn outward to their channels of supply and
distribution in search of untapped opportunities for
cost reduction
cycle time reduction
process agility
Emergence of SCM
Reason 1: (contd.)
Response to several critical business requirements

6. Dr Kripa Shanker IIT Kanpur 6
THEN
Previous management models focused on employing quality
and improvement methods that sought to increase marketplace
value by leveraging the capabilities to be found in internal
business process.
NOW
In contrast, SCM shifts attention to previously unseen
opportunities that appear when companies seek to converge
the innovative competencies and unique resources of their
external chains of customers and suppliers in the pursuit of
radically new sources of competitive advantage.
Emergence of SCM
Reason 2:
Internal vs. External business process
Closely integrated channels of suppliers and customers can provide with
unique sources of competitive competencies

7. Dr Kripa Shanker IIT Kanpur 7
THEN
Dependence on vertical integration for competitive advantage.
NOW
Companies divest of non-profitable business and functions for
which they have relatively weak competence.
Prefer to use channel partners who specialize in such business areas
Managing supply chain partners becomes the key
to market leadership
Emergence of SCM
Reason 3:
Vertical Integration vs. Divestment
Small and sleek is beautiful !

8. Dr Kripa Shanker IIT Kanpur 8
THEN
Limited and Local operations.
NOW
Due to ICTs, customers are no longer limited to national
sources of products and services.
The ability to assemble closely networked supply chains
provides even the smallest company with the capability to
maximize customers satisfaction and accessibility at the
lowest possible cost.
Emergence of SCM
Reason 4:
Globalization and Emergence of Information and Communication
Technologies Big yet sleek is beautiful !

9. Dr Kripa Shanker IIT Kanpur 9
Enterprise reengineering and operations streamlining have
forced companies to look seriously at their supply chain
partners to:
• Growth of information sharing between vendors and customers
• Rise of process-focused teams replacing departmental functions
• The shift in the market place from the mass-production of
standardized products to flexible operations providing customized
products
• Increased reliance on purchased materials and outside processing
with a simultaneous reduction in the number of suppliers
• Greater emphasis on organizational and process agility
• Rise of employees empowerment management techniques that
require the implementation of rule-based, real-timer decision
support systems
Emergence of SCM
Reason 5:
Enterprise reengineering and operations streamlining
Hand in Hand grow together !

10. Dr Kripa Shanker IIT Kanpur 10
Winning in the marketplace of the 90s is going to be require a far different kind of
relationship – one that recognizes that the ultimate winners will be those who
understand the interdependence of the retailer/manufacturer business systems
and who work together to exploit opportunities to deliver superior customer value
Ralph Drayer, Vice President for Product Supply/Customer Service at Proctor Gamble
Effectively managing supply chains means that
o Companies must create market-winning partnerships with
other companies that promote the competitive advantage of
the whole channel system
o Companies should know how to utilize technology to
coordinate internal activities with those of their trading
partners
o Companies must network information and synchronize the
capacities and resources to be found in each channel node
that permit the exploration of new regions of competitive
space and unassailable marketplace leadership
Emergence of SCM

11. Dr Kripa Shanker IIT Kanpur 11
How can companies realize fundamentally new avenues
of marketplace advantage by closely integrating the core
competencies and capabilities for innovative thinking to
be found among their supply chain business partners ?
Five major business dynamics driving the market place
• Dynamic 1 : Voice of the Customers
• Dynamic 2 : Agility + Flexibility + Creativity
• Dynamic 3 : Information and Communication Technologies
• Dynamic 4 : Marketing and Distribution Channel Environment
• Dynamic 5 : Supply Channel Logistics Integration
Realization of SCM – 5 MAJOR Factors

12. Dr Kripa Shanker IIT Kanpur 12
THEN
Companies sought to create and deliver
standardized, mass – market products to
customers who had relatively very little
purchase choice
NOW
Customers require tailored combinations of
high quality products and services that will
provide them with unique value and
solutions assisting them to realize their own
competitive strategies.
Realization of SCM – 5 MAJOR Factors
1 : Voice of the Customers

13. Dr Kripa Shanker IIT Kanpur 13
Constructing agile product design, manufacturing, and
delivery processes that continually provide superior
product and service quality, yet can quickly and cost-
effectively configured to meet individual customer needs.
Continually search for new ideas and processes that win
the customer’s order but that they must also possess the
competencies and resources to realize market-winning
innovations enabling them to create whole new markets
beyond the borders of their existing customers
Realization of SCM – 5 MAJOR Factors
2 : Agility + Flexibility + Creativity

14. Dr Kripa Shanker IIT Kanpur 14
• Value of accurate information
• Speed of communication
Information: fundamental source of wealth
Information Technology
not only as a critical management tool that shortens cycle times and
increases productivity of business functions through automation
BUT also as a key enabler providing the enterprise with opportunity to
activate highly competitive organizational cultures and channel
structures in search for new sources of market place leadership
IT has made possible the interactive networking of
congruent functions across the supply channel and the
linkage into single, competitive supply chain systems
Realization of SCM – 5 MAJOR Factors
3: Information and Communication Technologies

15. Dr Kripa Shanker IIT Kanpur 15
Dimensions
• Globalization of the world economy
• Rapid introduction of new products and services on an international scale
• Increased demand, demands for quick-response delivery
• Explosion of strategic alliances and partnerships on a global scale
Close inter-linkage of companies along a supply channel system
has enabled the formation of internetprise “virtual”
organizations capable of leveraging the skills, physical
resources, and innovative knowledge of a matrix of productive
capacities originating from different locations in supply
network
Realization of SCM – 5 MAJOR Factors
4 : Marketing & Distribution Channel Environment

16. Dr Kripa Shanker IIT Kanpur 16
Then
Logistics was perceived primarily as an operations activity
focused around product delivery and cost reduction
Now
Logistics as a strategic, cross-functional, internetprise
management activity whose mission is to both plan and
coordinate all inventory and delivery activities as well as to
realize new opportunities for competitive advantage.
Companies will increasingly seek to more closely integrate
logistics operations across the supply channel, dependence
on the SCM strategic philosophy will deepen as they explore
concurrently new ways to satisfy customers, develop new
products, explore new competitive regions, and implement
new technology tools.
Realization of SCM – 5 MAJOR Factors
5 : Supply Channel Logistics Integration